NDIC Addresses Asset Valuation Issues in Failed Banks

The Nigeria Deposit Insurance Corporation (NDIC) has reported that inflated valuations of assets from failed banks are major obstacles to recovering funds for uninsured depositors. Mr. Ogungbemi Theophilus, Director of the Asset Management Department at NDIC, stated that unrealistic asset valuations hinder the attraction of buyers and complicate the conversion of properties into cash, thus prolonging liquidation processes.

He emphasized the need for collaboration with estate surveyors, valuers, auctioneers, and sales agents to address these operational weaknesses. Theophilus noted that overvaluation discourages prospective buyers, while concerns about undervaluation and possible collusion among stakeholders also exist.

He explained that NDIC pays insured deposits without waiting for asset recovery, but balances exceeding insured limits depend on liquidation dividends from asset sales. Currently, depositors of deposit money banks are covered up to N5 million, while microfinance banks have a limit of N2 million.

Approximately 99 percent of depositors are fully covered under these limits.